We note that revenue growth improved share price return in the last one year. HubSpot (up 77.5%) has outperformed the Zacks Internet Software industry (23.2%) in the same period.

Quarter Details

Total marketing customers grew 28% from the end of 2015 to 23,226 at the end of 2016. Moreover, average subscription revenue per customer increased to $12,592 from $11,135 reported in the year-ago quarter.

Deferred revenue surged 48% year over year to $96.6 million. While calculated, billings defined as revenue plus the change in deferred revenues increased 40% in the same period to $88.8 million.

International revenue grew 67% year over year, representing 29% of total revenue in the quarter.

Adjusted operating loss (including stock-based compensation) was $13.8 million as compared with loss of $10.4 million in the year-ago quarter. The wider loss resulted from 24%, 48%, and 49% surge in cost of subscription, research & development and selling, and marketing expenses, respectively.

Guidance

HubSpot forecasts revenues in the range of $78.5–$79.5 million for first-quarter 2017, which reflects sequential improvement. The Zacks Consensus Estimate is currently pegged at $79 million.

Non-GAAP operating loss is expected to in the range of $3.5–$2.5 million. Non-GAAP net loss is expected to be in the range of 10–8 cents per share.

For full-year 2017, HubSpot forecasts revenues in the range of $349–$353 million for first-quarter 2017. The Zacks Consensus Estimate is currently pegged at $348.6 million.

Non-GAAP operating loss is expected to in the range of $11.5–$7.5 million. Non-GAAP net loss is expected to be in the range of 30–22 cents per share. The company anticipates services margins to improve in 2017.

Management expects normal seasonal headwinds from early hiring, payroll resets and annual compensation adjustment to keep margins under pressure in first-half 2017. However, HubSpot expects margin expansion for the full year of 2017.

Long-term earnings growth rate for FireEye, Model N and Zendesk is currently pegged at 15.67%, 10% and 25.01%, respectively.

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